The battle over New Jersey’s auto insurance rates and regulations, which began when State Farm Indemnity, the largest writer in the State, announced its intention to withdraw from the market, continues to rage as the IIANJ, the AIA and A.M. Best all joined the fray.
The Independent Insurance Agents of New Jersey warned that “over one million NJ drivers could lose their coverage.” The American Insurance Association filed a lawsuit against New Jersey’s Department of Banking and Insurance (DBI) “for its failure to adopt a complete medical fee schedule for automobile injuries, and for failing to adopt hospital and dental fee schedules.” Finally New Jersey-based insurance analysts A.M. Best waded in with a “Special Report” on the State’s auto insurance market that concluded that efforts to reform the system had failed.
IIANJ President Gary Newborn warned consumers to begin looking for auto insurance. As many as one in five NJ drivers could be affected by the withdrawal requests, and they may end up paying higher rates. Newborn pointed out the anomaly that rate regulations designed to hold down insurance costs had actually produced the highest premiums in the country, and urged reform of the system.
The AIA charged that the DBI had adopted only a partial medical fee schedule, which did not meet the requirements of the 1998 Automobile Insurance Cost Reduction Act. Specifically it pointed out that only 92 out of 953 “current procedural technology codes in use” were scheduled. No hospital or dental fee schedules have been established.
The A.M. Best report, “New Jersey Auto: Why Are Insurers Looking for the Exit Ramp?” was published in the August 26 issue of Best Week, and also appears on the company’s website, www.bestweek.com.
It addresses the problems caused by the highly politicized nature of the State’s regulatory policies, and concludes that past reforms haven’t been enough to keep insurers from wanting to withdraw from the market, nor have they attracted new companies to enter it.
Topics Auto Legislation New Jersey
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